Why we never lost our way on Wall St

On Friday, Oliver Stone’s sequel to Wall Street premiered at the Cannes film festival. Readers of a certain age may remember the first Wall Street, which came out 23 years ago and starred Michael Douglas as Gordon Gekko, a ruthless financier who gave suspenders a bad name, writes Vir Sanghvi.

On Friday, Oliver Stone’s sequel to Wall Street premiered at the Cannes film festival. Readers of a certain age may remember the first Wall Street, which came out 23 years ago and starred Michael Douglas as Gordon Gekko, a ruthless financier who gave suspenders a bad name.

One of the pivotal moments in the first film was a scene where Gekko strides through an admiring audience at a shareholders’ meeting, delivering his mantra: ‘Greed is good.’ That one phrase captured the ethos of Wall Street and of the culture the film was trying to attack.

In fact, that phrase did not spring from Stone’s imagination. Gekko’s intervention at the shareholders’ meeting was stolen from speeches made by Ivan Boesky, routinely described by the press as a ‘Wall Street raider’ who preached that capitalism was predicated on greed and that this was a good thing. (Eventually, the real Boesky and the fictional Gekko both went to jail for fraud.)

When the first Wall Street movie came out, India was in the midst of a mini-stock market boom. Till 1985, the stock market had been far removed from the consciousness of most middle-class Indians. But it suddenly began to be perceived as the perfect route to instant prosperity. You would see secretaries coming into work, clutching forms for Initial Public Offerings (IPOs). Tip sheets masquerading as newspapers were hawked on the streets of Nariman Point and the middle class suddenly went stock-market crazy.

Like many journos of my generation, I remain mystified by the stock market and its machinations. But even then it struck me that a philosophy that advocated greed could not be good for emerging India. Of course, I recognised that the market had an important role to play in mobilising resources and I accepted that there was money to be made in stocks.

But what worried me about the ethos of the stock market boom was its central message: you can get rich by doing nothing.

Wall Street had been intended by Oliver Stone as an attack on the culture of greed. Instead, in America at least, it had the opposite effect. Gekko became a role model for many young people and the movie managed to make the dull business of trading stocks and shares seem glamorous and sexy.

For a long time, I wondered if India would follow the American example. In the early 90s, there was an even bigger boom in the Indian stock market. I watched horrified as people took loans so that they could put money into the stock market. Salaried employees had come to believe that the money they earned from hard work was worthless. The path to immense wealth lay in buying stocks and shares. Greed was good. Hard work was for chumps.

I wrote about this in Counterpoint at the time. If a society believes that the path to riches lies in buying and selling pieces of paper rather than in making things, I said, then that society is in deep trouble. India could be one of the great success stories of the 21st century. But we could never do it unless we valued hard work and the creation of real wealth.

Events worked to confirm this view. The Harshad Mehta scam led to a collapse in the stock market and many of my colleagues lost their savings. In 1997, the Asian crisis drove home to me how fragile an economic bubble could be. As globalisation gathered pace, we were all at the mercy of the whims and yes, the greed, of global financiers. They could make or break our markets. They could destroy our currencies. And they could take economies from boom to bust.

Now, as I read the commentaries that greet the release of the sequel to the original Wall Street, I can’t help feeling that eventually, India got it right. Despite pressure from the West and the advice of many home-grown pundits, the government refused to embrace globalisation as completely as Wall Street demanded. The fiscal conservatism and the monetary caution that international bankers mocked us for probably saved the Indian economy. As Wall Street led America into its deepest recession, India remained relatively unscathed. In fact, the damage to our economy was almost exactly equal to our exposure to global finance. But because we had refused to be swayed by the cult of easy money and greed, we were immune to the problems that Wall Street caused the rest of the world.

More encouraging, to me at least, was that the middle-class saw through the greed-is-good mantra. The stock market has yielded good returns over the last ten years (even the troughs have eventually been smoothed over) and most experts predict that the growth will continue. Last week, I interviewed Deepak Parekh, one of the few financial wizards who always puts the little people first. Deepak believes that it would be foolish not to put a portion of our savings in some market-related instrument or investment.

And yet, despite such powerful encouragement and the prospect of good returns, the Indian middle-class has eschewed the get-rich-quick frenzy of the 90s. No longer do salaried people dream of getting a 100 per cent return on their investments in a couple of months as they did in the

90s. Instead, we are much more prudent, much more cautious and — well, yes — much more Indian in our approach. We put our jobs and our careers first. Everything else is just icing on the cake.

America has not been as fortunate. Not only did too many Americans buy shares they could not afford but they were also pushed into taking huge home loans that they could never hope to pay back. The financiers told them not to worry. The value of their homes would soar and they would never have to bother about paying back their loans. These home loans were then secured by Wall Street and when house prices refused to rise as predicted, the entire financial system came tumbling down like a house of cards.

The release of the Wall Street sequel has a special meaning for Americans. In the movie, Gekko is released from jail and is startled to discover that the excesses of his Wall Street years pale in comparison to what is considered industry practice these days. Greed is not just good, it is a way of life.

For us in India, the sequel holds less meaning. The first Wall Street sent out a message that America ignored. But we listened. We learnt. And we are far better off than much of the world as a consequence.

Because ultimately our Indianness re-asserted itself. Greed never pays. Hard work is the only answer. And in all things, be cautious.